Genesis Energy (NZSE:GNE) Has Some Way To Go To Become A Multi-Bagger

editorial-team@simplywallst.com (Simply Wall St)

Tue, May 13, 2025, 12:52 PM 2 min read

If we privation to find a imaginable multi-bagger, often determination are underlying trends that tin supply clues. In a cleanable world, we'd similar to spot a institution investing much superior into its concern and ideally the returns earned from that superior are besides increasing. This shows america that it's a compounding machine, capable to continually reinvest its net backmost into the concern and make higher returns. Although, erstwhile we looked astatine Genesis Energy (NZSE:GNE), it didn't look to tick each of these boxes.

We've recovered 21 US stocks that are forecast to wage a dividend output of implicit 6% adjacent year. See the afloat database for free.

If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a institution generates from superior employed successful its business. The look for this calculation connected Genesis Energy is:

Return connected Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)

0.036 = NZ$190m ÷ (NZ$6.0b - NZ$696m) (Based connected the trailing 12 months to December 2024).

Thus, Genesis Energy has an ROCE of 3.6%. In implicit terms, that's a debased instrumentality and it besides under-performs the Electric Utilities manufacture mean of 6.5%.

Check retired our latest investigation for Genesis Energy

In the supra illustration we person measured Genesis Energy's anterior ROCE against its anterior performance, but the aboriginal is arguably much important. If you'd similar to spot what analysts are forecasting going forward, you should cheque retired our free expert study for Genesis Energy .

In presumption of Genesis Energy's humanities ROCE trend, it doesn't precisely request attention. The institution has consistently earned 3.6% for the past 5 years, and the superior employed wrong the concern has risen 29% successful that time. This mediocre ROCE doesn't animate assurance close now, and with the summation successful superior employed, it's evident that the concern isn't deploying the funds into precocious instrumentality investments.

As we've seen above, Genesis Energy's returns connected superior haven't accrued but it is reinvesting successful the business. Unsurprisingly, the banal has lone gained 13% implicit the past 5 years, which perchance indicates that investors are accounting for this going forward. Therefore, if you're looking for a multi-bagger, we'd suggest looking astatine different options.

Genesis Energy does travel with immoderate risks though, we found 3 informing signs successful our concern analysis, and 1 of those is simply a spot unpleasant...